Baltic Dry Index. 1409 -09
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"I therefore trust that Greece's elected representatives will back these [new austerity] measures next week in a spirit of national and indeed European responsibility"
European Commission President Jose Manuel Barroso. June 20, 2011.
Stay long physical precious metals. In Athens last night, all 155 socialist MPs lined up behind their Quisling like Prime Minister, and he won the confidence vote 155 to 143. It wasn’t exactly unexpected. If he lost the vote, in the ensuing election to follow, many of the 155 could expect to be voted out of office. This is not a good time to be seeking a job in Greece, especially with “former austerity MP” on the resume. And so the drama moves on to the next act, the Parliament must now pass a new wave of austerity and privatizations, on the hapless Greek serfs. The latest dodge to get the turkeys to vote for Christmas, is for the government to hint that it’s safe to vote for Christmas, because the government has no intention of implementing much of the new austerity package. Welcome to Europe, 2011 style. Who would want to be a member of this asylum club?
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
EU urged to block Greece bail-out
European leaders have been urged to scrap plans for a second Greek bail-out – as the Athens government wins a critical vote of confidence in parliament.
By Louise Armitstead 7:17AM BST 22 Jun 2011
Leading London-based think tank Open Europe has claimed that a fresh bail-out, expected to be around €120bn (£106bn), will almost triple taxpayers’ existing exposure to Greek debt.
“Despite a second Greek bail-out being EU leaders’ preferred option, it is only likely to increase the economic and political cost of the eurozone crisis,” said Open Europe in a report.
----The Chinese Foreign Ministry said it was willing to talk about ways it could help stabilise the European financial system during its visit to Britain, Germany and Hungary this week.
Ahead of the visit by Premier Wen Jiabao, a spokesman said: “The Chinese government has already taken a series of proactive measures to push Sino-Europe trade and economic cooperation, such as buying euro bonds … China is willing to continue helping European countries realise economic growth.”
Power supplies across Greece and some of its islands were again disrupted following strikes by workers at Public Power Corp, a state electricity provider which is facing privatisation.
The power cuts have impacted a raft of firms from transport groups to restaurants, which have been struggling in the high temperatures.
Separately, European banks may be forced to quantify and publish their exposure to Greek debt as part of regulatory stress tests set for July 13. The European Banking Authority (EBA) is analysing each bank’s ability to handle a sovereign default or severe downgrade.
More
http://www.telegraph.co.uk/finance/financialcrisis/8590565/EU-urged-to-block-Greece-bail-out.html
Of course the ECB, IMF, and EU bureau-rats aren’t fools, they will simply tie the new cash releases to targets in implementing the new austerity. In an already failing economy, taxes are to be raised, government spending to be drastically cut, a large part of the bloated 1 million public sector workers fired, and privatizations attempted at fire sale prices. Maybe the Chinese sovereign wealth fund will show up and buy what’s left of the Elgin Marbles. And all so the Greek government can go into another 100 billion euros or so of new debt, to bail out Europe’s banksters who foolishly lent 400 billion euros to Greece based on some of Goldman’s “creative” accounting. God’s work seems different in the 21st century.
While that might be a good thing in boom times, further bloodletting the patient in current conditions, practically guarantees a depression in Greece, and an eventual default at some point ahead. Sensible Greeks will quickly move all of their savings out of Greek banks ahead of the coming turmoil and default. I suspect that most Greeks will quickly find ways to nullify any tax increases, while Greek unions will do their best to nullify any fire sale privatizations. The brave people of Iceland are reconfirmed in their correctness in refusing to bail out Europe’s banksters. Unemployed and futureless Greeks, will probably seek the solution of the French Revolution.
Too late will the Greeks decide it’s far better to leave the doomed European Currency Union sooner rather than later, and leave the other central banks of Europe to deal with their insolvent banks, ala Iceland. Hopefully Irish MPs are watching and coming to the same conclusion. Ireland is in far better shape than either Greece or Iceland to rebound quickly.
With the next act in Greece still to take place, we turn this morning to yet another warning on China. It seems to me at least, this might be a good time to try to win a lottery.
June 21, 2011, 8:00 p.m. EDT
China growth to cool as credit, trade ebb: Duncan
HONG KONG (MarketWatch) — China’s era of rapid economic growth is drawing to a close, with a great moderation now inevitable, according to economist and author Richard Duncan.
“I don’t think [China] will be able to achieve their current rates of growth in the next five years,” Duncan told MarketWatch in a telephone interview from Bangkok.
Among reasons for the changes, he said, Beijing won’t be able crank up credit growth further without inflicting self-damage, nor is its export-led growth model viable as the taps tighten on worldwide easy money.
Duncan believes it’s only government life-support in the form of deficit spending that’s kept the global economy from falling into a depression since the 2008 credit crisis, and if the slowdown spreads as he expects, China won’t have an easy time shielding its economy from a slump in consumer demand.
“The whole story of the global economy is that there’s too much supply of everything and insufficient global demand,” said Duncan.
China managed to avoid a recession thanks largely to rapid credit growth, as its state-controlled banks expanded their loan books by 60% over a 24-month period.
Meanwhile, millions of Chinese factory workers who were laid off during the crisis were eventually hired back as global trade slowly normalized.
Duncan isn’t so sure that China can look to rapid credit growth this time if there’s a another serious slowdown, or that global trade will recover without a protectionist backlash, as economies such as the U.S. and Europe suffer high unemployment.
China “will be singled out by the U.S. and forced to stop growing its trade surplus ... and that will be the death blow to China’s era of rapid economic growth,” Duncan said.
More
http://www.marketwatch.com/story/china-growth-to-cool-as-credit-trade-ebb-duncan-2011-06-21
Later today, the Fed is widely expected to leave their key interest rate unchanged, but all will want to know what follows the end of QE2. The Fed is expected to say that there won’t be a QE3, but once on QE programs is it ever really possible to stop them without triggering the event they were brought in to prevent. In this case that was to stop the Great Recession from becoming the first Great Depression of the 21st century. In the months ahead, we are about to find out if QE1 and QE2 worked or merely delayed the transition. If it starts to look like it merely delayed the transition, QE3, QE4, QE infinity, will surely come. More tomorrow, it’s time to watch some Wimbledon while we wait.
I know what you're thinking. "Did Bernanke fire six shots or only five?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is the worst recession since the 1930s, the most powerful credit shock in the world, and would blow your savings clean off, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?
With apologies to Harry Callahan, Dirty Harry.
At the Comex silver depositories Tuesday, final figures were: Registered 27.97 Moz, Eligible 72.47 Moz, Total 100.44 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today, the seriously bent Allied Irish Bank, fails to avoid being declared in default. Will the Greek banks be very far behind?
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable.
Alexander Solzhenitsyn
Allied Irish Bank has 'defaulted' says derivatives body
Banks that sold insurance on the debt of Allied Irish Banks will have to pay out to investors in the nationalised lender's debt despite complex legal manoeuvres by the Irish authorities to avoid putting the lender into default
By Harry Wilson, Banking Correspondent 6:00AM BST 22 Jun 2011
The International Swaps and Derivatives Association (ISDA) yesterday said that a "credit event" had occurred on Allied debt, meaning the bank has effectively defaulted on its debt, a situation the Irish government has gone to extreme lengths to avoid.
Credit default swaps (CDS) sold on Allied subordinated bonds and, crucially, its senior debt, have been activated by the decision of the ISDA determinations committee that decides whether a borrower has defaulted.
The decision by the committee, which is made up of 10 major banks, follows the announcement earlier this month by the Irish High Court of a "subordinated liabilities order" that changed the terms under which junior debt in Allied was originally sold, forcing holders of the bonds to accept an extension in the maturity of the debt to 2035.
Allied had already missed a coupon payment on its Lower Tier 2 debt. However, changes in the law enabled the bank to avoid being forced to be formally placed in default.
For the market, ISDA's decision renders this move largely irrelevant as it means the bank will be categorised as in default in the eyes of investors.
While the Allied decision was in line with market expectations and covers only a relatively small number of bonds, it sets a precedent for upcoming decisions on Bank of Ireland debt that is likely to be more significant as the lender is the last major Irish bank not to be fully nationalised.
Of even more significance will be the read-across for CDS contracts written on Greek government debt and that of other indebted European governments.
More
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008.
The monthly Coppock Indicators finished May:
DJIA: +196 Up. NASDAQ: +249 Up. SP500: +200 Up.
The Dow and SP 500 and NASDAQ have all reversed from down to up. The Fed’s rigging of the indicators seems to have worked. Note: like all indicators, they were devised for normal markets not markets where the central bank is flooding the economy with new cash. In current conditions where risk is suspended by too big to fail, I doubt any indicators are showing more that where the Fed’s new cash is flowing in our world of casino capitalism. But the Fed’s QE program is supposed to end this month!!!
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